IS golf estate developer Acc-Ross in the rough, having paid its adviser effectively R26m for raising R5m in its February listing?
Page 31 of the prospectus shows that Acc-Ross issued 26,8m shares plus 2,5% of capital raised to its adviser, Arcay Corporate Services. The issue price was R1.
The share briefly attained this level, making Arcay’s holding worth R26,8m for a while. It has since slumped to 33c. Even at today’s lower price Arcay received shares worth R9,68m.
Arcay CEO Kevin de Villiers said his company had been at Arcay’s side for more than two years and the shares were its only remuneration.
“We took them through the merger with Gardener Ross and that wasn’t a simple transaction.”
While Acc-Ross raised only R5m of new equity capital from share subscribers, compared to the target of R326m, a number of debenture holders converted their debentures into ordinary shares. As a result, altogether R112m was raised in the listing.
Acc-Ross depends nearly entirely on property sales for its revenue. It holds large tracts of land. Its partner funders include Investec, Imperial Bank
The listing funds were supposed to help fund development of Acc-Ross’s many estates. The company warned that if the funds were not forthcoming, it would stall some of them.
Acc-Ross claims leadership in the golf estate development business. Some of its estates are endorsed by Ernie Els and Retief Goosen. Its ambitious prospectus forecasts were based on nine developments. The exciting prospects of each were described in loving detail in the prospectus.
Costs and planned revenues attaching to each look like telephone numbers and partially explain why there are more than 1bn shares in issue.
Its Lizard Point development near AWB outpost Oranjeville will be undertaken in four phases. It is expected to cost R4,5bn in eight years. Brooklyn Stone in Pretoria claims “pre-sales” of R120m. Royal Palms near Plettenberg Bay is being funded by Investec.
The Ponds near Muldersdrift comprises 1 250 residential stands. Acc-Ross planned to fund this land purchase out of the listing proceeds.
Its proposed Nondela development in the Drakensberg at this stage is just a tract of veld and a gleam in the eyes of its developers – but Acc-Ross said in its prospectus that it is budgeting for a profit of R400m before tax.
Acc-Ross revenue in the year to February 2006 was R157m. This was forecast to grow nearly eight times to R1,2bn in 2007. Gross profit was slated to soar to R402,4m (R66m). The company hopes to transform a loss of R28,8m in the year to February 2006 into a profit of R100,8m.
